If you have talked to a cash buyer about your house, you have probably heard the term ARV. It stands for After Repair Value, and it is the single number most cash offers are built on. Understanding it is the difference between an offer that feels arbitrary and one you can actually check.
ARV is what your house would sell for on the open market after it has been fully repaired and updated. Not what it is worth today, in its current condition. What it would fetch fixed.
How ARV Is Actually Calculated
A buyer looks at homes near you that have already sold, not what people are asking. Asking prices are opinions. Sold prices are facts. They will usually pull three to six comparable sales from the last three to six months, within about a mile, matching your home on bedrooms, bathrooms, square footage and lot size.
Then they adjust. A comp with an extra bathroom gets marked down to match your house. A comp with an older roof gets marked up. What comes out the other side is the ARV: the realistic sale price of your property in finished condition.
The Formula Behind Your Offer
Almost every cash buyer in the country runs some version of the same arithmetic:
Offer = ARV - repair costs - holding and selling costs - profit margin
Say your house would be worth $400,000 fixed up. It needs $60,000 of work. The buyer will hold it for four months paying taxes, insurance, utilities and financing, then pay commission and closing costs when they resell, call that $30,000. And they need a margin to justify the risk, often around 10 to 15 percent of ARV, so $50,000.
$400,000 minus $60,000 minus $30,000 minus $50,000 leaves an offer near $260,000.
That is a real reduction from $400,000, and it is worth being honest about. What you get in exchange is no repairs, no commission, no showings, no financing that can collapse, and a closing date you choose. Whether that trade is worth it depends entirely on your situation.
Why the Repair Estimate Matters More Than the ARV
Most sellers focus on whether the ARV is right. In practice, the repair number is where offers diverge most. Two buyers can agree your house is worth $400,000 fixed and still be $40,000 apart because one of them budgeted for a roof and the other did not.
So when you get an offer, ask for the repair breakdown. A buyer who is being straight with you will walk you through it line by line. A buyer who will not show you the maths is not somebody to sell a house to.
How to Sanity-Check an Offer Yourself
- Look up recent sold prices near you, not active listings. Public records and the major portals both show them.
- Pick the three that most resemble your house in size, age and layout. That range is roughly your ARV.
- Ask the buyer what repair figure they used and what it covers.
- Do the subtraction. If the result is close to their offer, the number is defensible. If there is a large unexplained gap, ask about it.
When ARV Works in Your Favour
If your neighbourhood has been appreciating, or a comparable house down the street just sold high, your ARV moves up and so should your offer. It is entirely reasonable to bring a recent sale to a buyer's attention. We have revised our own offers upward more than once because a seller pointed out a comp we had missed.
The Short Version
ARV is not a trick. It is the anchor for the whole calculation, and once you know how the arithmetic works you can tell a fair offer from a lowball one in about ten minutes.
If you want a number on your own property with the workings shown, you can get a free cash offer from Trusted Homebuyers USA. It costs nothing and there is no obligation attached to it.
Common Questions
Is ARV the same as an appraisal?
No. An appraisal values the house as it stands today. ARV values it as it would be once repaired and updated. The two numbers can be far apart on a property that needs work.
Can I challenge a buyer's repair estimate?
Yes, and you should if it looks high. Bring quotes from your own contractors. A buyer who has budgeted $25,000 for a roof will usually move if you can show a real bid for $12,000.
Do cash buyers all use the same margin?
No. It commonly sits between 10 and 15 percent of ARV, but it varies with the buyer's cost of capital and how much risk the property carries. This is one reason offers on the same house differ.
Does a higher ARV always mean a higher offer?
Only if the repair estimate stays the same. A house in an expensive area that needs a full gut can still produce a modest offer, because the repair figure scales with the finish level the market expects.
Where can I look up sold prices myself?
County recorder or assessor sites publish sale prices, and the major listing portals show recently sold homes. Filter to the last six months and stay within about a mile.